What is the Gokhale Method franchisee prohibited from doing regarding the operation of the Franchised Business after termination?
Gokhale_Method Franchise · 2024 FDDAnswer from 2024 FDD Document
[Item 22: CONTRACTS]
16. OBLIGATIONS UPON TERMINATION OR EXPIRATION
Upon termination or expiration of this Agreement for any reason, all rights granted hereunder to you shall forthwith terminate, and:
- 16.1. Cease Operations. You shall immediately cease to operate the Franchised Business, and shall not thereafter, directly or indirectly, represent to the public or hold yourself out as a present or former Gokhale Method Franchised Business. Immediately upon the expiration or termination hereof, you shall dispose of, and not transfer to anyone other than us, any Gokhale Method products, equipment or other items sold hereunder
- 16.2. Cease Use of Confidential Information and Marks. You shall immediately and permanently cease to use, in any manner whatsoever, any of our Intellectual Property, including but not limited to Confidential Information, methods, procedures and techniques associated with the System, and all Marks and distinctive forms, slogans, signs, symbols, colors, and devices associated with the System. In particular, you shall cease to use, without limitation, all signs, advertising materials, displays, stationery, forms, products and any other articles that display the Marks. You shall de-identify the Location of the Franchised Business so that there is no use or display of the Marks after the effective date of termination or expiration.
- 16.3. Cancellation of Registrations. You shall take such action as may be necessary to cancel any assumed name registration or equivalent registration obtained by you which contains the "Gokhale" word, or any other Marks, and you shall furnish us with evidence satisfactory to us of compliance with this obligation within five (5) days after termination or expiration of this Agreement.
- 16.4. Assignment of Lease. You shall, at our option, except in the event you continue to operate any other business you were operating from the same Location assign to us any interest which you have in any lease or sublease for the Location. In the event we do not elect to exercise our option to acquire the lease or sublease for the Location, you shall make such modifications or alterations to the Location (including, without limitation, the changing of, and the assigning to us of, the telephone number) immediately upon termination or expiration of this Agreement as may be necessary to distinguish the appearance of the Location from that of the Franchised Business under the System, and shall make
- 16.9.
Websites and Email.
You shall cease use of any of our domain name, URL, email address or home page address, or any such name or address that is confusingly similar to one of ours, and shall not establish any Website using any similar or confusing domain name, URL, and/or home page address.
- 16.10.
Our Option to Purchase Equipment.
We shall have the option, at our sole discretion, to be exercised within thirty (30) days after termination or expiration, to purchase from you any or all of the equipment, signs, inventory, materials, supplies and fixtures related to the operation of the Franchised Business at fair market value or at sixty percent (60%) of your original investment, whichever is less. if the parties cannot agree within such time on the price of any such items, an independent appraisal
shall be conducted at our expense by an appraiser we select, and the appraiser's determination shall be binding. If we elect to exercise any option to purchase herein provided, it shall have the right to set off all amounts due from you, and the cost of the appraisal, if any, against any payment therefore.
16.11. Compliance With Covenants. You shall comply with the covenants contained in Section 17 of this Agreement.
17. COVENANTS
- 17.1. In-Term Covenants. You specifically acknowledge that, pursuant to this Agreement, you will receive valuable, specialized training and Confidential Information, including, without limitation, information regarding the Gokhale Method and techniques used by us and the System.
You covenant that during the Term of this Agreement, except as otherwise approved in writing by us, you shall not, either directly or indirectly, for yourself, or through, on behalf of, or in conjunction with any person or legal entity:
- 17.2.
Post-Term Covenants.
You covenant that, except as otherwise approved in writing by us, you shall not, within a 10-mile radius of your former Location or of any location then existing where the Gokhale Method is taught, and for a continuous, uninterrupted period of two (2) years following the end of our relationship with you, whether by termination, expiration or otherwise, either directly or indirectly own, maintain, operate, engage in, be employed by, provide assistance to, or have any interest in (as owner or otherwise) any Competitive Business.
A "Competitive Business" is a business that: is the same as, or substantially similar to, the Franchised Business; or that offers to sell or sells any services, equipment, products or other items which are the same as, or substantially similar to, any of the services, equipment, products or other items offered by us or our franchisees or Affiliates.
If you do not immediately comply with this paragraph upon the end of our relationship, the two-year period referred to above will commence when you begin compliance.
Source: Item 22 — CONTRACTS (FDD page 34)
What This Means (2024 FDD)
According to the 2024 Gokhale Method Franchise Disclosure Document, upon termination or expiration of the Franchise Agreement, the franchisee must immediately cease operating the Franchised Business and cannot represent themselves as a current or former Gokhale Method franchisee. The franchisee must dispose of all Gokhale Method products and equipment, and not transfer them to anyone other than Gokhale Method. They must also stop using any of Gokhale Method's intellectual property, including confidential information, methods, trademarks, slogans, and advertising materials. The franchisee is responsible for de-identifying the business location to remove any association with the Gokhale Method brand.
Additionally, the franchisee must cancel any assumed name registrations containing the word "Gokhale" or any other Gokhale Method marks within five days of termination or expiration, providing evidence of compliance to Gokhale Method. Gokhale Method has the option to have the franchisee assign any interest in the lease for the business location to them. If Gokhale Method does not exercise this option, the franchisee must modify the location to distinguish it from a Gokhale Method Franchised Business, including changing the telephone number.
Furthermore, the franchisee must comply with specific covenants, including not operating a competitive business within a 10-mile radius of their former location or any existing Gokhale Method location for two years following the termination. A competitive business is defined as one that is substantially similar to the Gokhale Method Franchised Business or offers similar services or products. The franchisee must also cease using any Gokhale Method domain names, URLs, email addresses, or home page addresses, and cannot establish any website with confusingly similar names or addresses.
Gokhale Method also has the option to purchase the franchisee's equipment, signs, inventory, materials, supplies, and fixtures related to the business operation at fair market value or 60% of the original investment, whichever is less. If the parties cannot agree on a price, an independent appraisal will be conducted at Gokhale Method's expense, and the appraiser's determination will be binding. Gokhale Method can offset any amounts owed by the franchisee, including appraisal costs, against any payment for these items.